Show the new budget se of the government taxes

Reference no: EM13245263

Suppose Px = 2, Py = 1, I = 100

a)Show the budget set.

b)Suppose now the x decreased and price of y increased such that P'x = 1, P'y = 2. Show the budget set.

c)Suppose that the government taxes (at the new set of prices P'x = 1, P'y = 2 ) the consumer an extra 1/2 dollar for each unit of x he buys beyond 70 units. That is no tax for x<70 and 1/2 dollar tax for each x>=70. Show the new budget set.

Reference no: EM13245263

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